He came to this cold country from sunny Italy, bringing with him a whole arsenal of heating systems. He is a qualified engineer, who headed the Russian mission of the well-known Italian company Fondital, which produces gas and diesel furnaces, heat blocks, boilers and radiators. He has already demonstrated what Italian quality at an affordable price means in the Urals, in the depths of Siberia and in Trans-Baikal. He has kindly agreed to share with BIGRUSSIA readers his views on the Russian mentality, partners, the local market and the hidden obstacles which await foreign dealers in Russia.

They asked me at Customs: “Are you a real director?”

– You might say I was a technician by education. I obtained an engineering degree when I graduated from university in Brescia, which is in eastern Lombardy. But I found office work boring and restricting. So I went over to commerce, to Garoll Impianti, a major producer of sanitary porcelain articles, with branches all over the world. The world market - that was what I needed! I wanted to work, to travel, to meet new people and acquaint myself with different cultures.

The company was founded in 1970 by the Italian entrepreneur Silvestro Noboli. That was when the first Fondital works for producing aluminium radiators, employing about 100 people, opened in Brescia province. Fondital now has five factories. Over 2,000 people work in them. As the business expanded, other enterprises in the same and associated fields were acquired and new lines of activity were opened. At the present time, Fondital is an industrial group of 12 companies, forming four production sectors. The group’s total turnover is approaching one billion euros.

– Did you ever think you would work in Russia?

– I well recall the moment when Russia appeared on my horizon. I was called in by the company manager and asked “Would you like to go on vacation for three or four years?” I asked “Where to?” And received the reply “To Russia!” A specialist was required there to take responsibility for a project. I was lucky. The Russian market was developing actively, and the company was planning to start several new projects there. This was an interesting position in an interesting country with good prospects.

I was lucky. The Russian market was developing actively, and the company was planning to start several new projects there.

– What sort of a send-off did you get from friends and relatives?

– My father, who had been in Russia in the Soviet era, asked me to bring him a “Komandir” watch with a star on it. Others tried to frighten me with talk of bears and snowstorms, or expected me to bring them black caviar and Matryoshka dolls. In other words, all the usual stereotypes.

– What were your first impressions?

– When I arrived, I travelled from Sheremetyevo Airport on the Leningrad Highway. I was impressed by the size of the city; the distances were much greater than what we were used to in Europe. I spent my first night in Russia at the Ukraina Hotel, a huge edifice built in Stalin’s day. I sensed the spirit of history there.

– Are any acquaintances and connections necessary to begin a business or work in Russia?

– We built a factory to produce sanitary ware at Noginsk, in Moscow oblast. When I arrived, there was already an Italian expert working there. He spoke excellent Russian, was well informed about the business and knew the Russian market well. At the beginning, he became my “guru”, helping me to get into the swing of things. When his contract expired, I began working independently. In general, I want to say that everything depends on the person concerned. If you have the motivation, the interest and the desire to achieve results, you can begin independently, from nothing. But I gained my most useful experience after I was already working for Fondital.

– What difficulties did you have to face?

– Up to 2009, the company worked through importers. But we recognised the importance of the Russian market and decided to invest in it by opening our own mission there, headed by me. Then I had to deal with the local bureaucracy and customs. As soon as I started work in my new post, they rang me from the Federal Migration Service and said that my registration had been submitted incorrectly. When I arrived at the FMS, they took away my passport and told me the matter of my departure from Russia was under consideration. I assured them that my bookkeeper had sent off all the necessary documents and filled in all the registration forms in accordance with the standard procedure. It was hinted to me that if I contributed a substantial sum in euros, all the problems would be sorted out by their specialists. They were virtually openly demanding a bribe; they told me that otherwise I would have to pay a fine. But I didn’t give them any backhanders. All the problems were solved through official channels. However, I must admit that this was quite a stressful experience in dealing with the local authorities

I didn’t give them any backhanders. All the problems were solved through official channels.

Another negative impression was derived from passing our truck through Russian customs. They called me from the border and told me that our truck could not be allowed through because the freight documents were not filled in correctly. I had to go with a team to Bryansk. There it proved that the papers were all in order, but the customs officers wanted to know more about our company, to make sure that it was our own freight, and to learn about our products and the price formation process.

I spent a long time explaining to them that the declared price for the products was based on the cost of materials and transportation, and expenses on human resources… But they asked: “Are you a real director?” The question made me laugh. Then I found out that there were frequently cases in Russia of substitute people being appointed director of a company, i.e. this person was only a figurehead, and in fact all the work was done by quite different people who did not want their presence known.

Then our first truck passed through customs. We had no problems after that. We worked through brokers, everything was transparent and all the documents were completed in accordance with the established procedures.

Russians take a decision to purchase lightly

– Was it difficult to find office premises for the firm’s headquarters here?

– It wasn’t easy. When I found prospective offices through agencies, they told me something like: “The price is such-and-such, but 60% must be transferred to an offshore account and the rest paid here in Russia”. There was another way the situation could develop. They offered something like an auction. It was required that a certain sum of money be put on the agent’s table and then the premises could be occupied. But if someone else offered a greater amount, we would have to leave. This a rather different approach to solving problems with offices than from what is accepted in Europe. The result was that we decided not to buy office premises but to lease them. All the more so since the crisis had begun and property prices were falling sharply. In general, it costs twice as much to lease premises in Moscow as in Europe.

– What is different about the Russian market?

– In Italy, for example, the market is more fragmented. There you work directly with the customers, but in Russia, you work with big distributors. Here the interaction takes place a stage higher, which makes the work more interesting.

In Italy, the market is more fragmented. There you work directly with the customers, but in Russia, you work with big distributors.

The Russian market has great potential. Naturally, it is not easy to do business here. If you want to succeed, it is important to understand on what basis local customers decide to buy something, because their logic is quite different from the way Europeans think.

– In what way do Russian customers differ from Western ones?

– Russian customers are very emotional in taking a decision. If they like the goods, they may make the purchase instantly. Even if they have to do it on credit. They often buy a more expensive and better product, rejecting the “cheap Chinese” alternative. European purchasers usually spend a long time studying the specifications, comparing different brands and prices. That is to say they approach the purchasing process more rationally..

– Is it easy to find clients in Russia?

– It wasn’t difficult for me, because any information is available in Russia. For example, in certain markets it is possible to buy any database on discs, not excluding that of the customs. Again, all the information about companies and business people is on the internet. You can work anywhere if you have a notebook computer with you. There is Wi-Fi in cafés and on the metro. In Europe the situation is rather different. So from the point of view of accessibility of information, Russia is ahead of Europe.

From the point of view of accessibility of information, Russia is ahead of Europe.

– What can you say about the competition?

– Our main competitors were foreign manufacturers, particularly Chinese ones. Only one Russian company was producing and delivering aluminium radiators for the local market.

– How did you succeed in increasing sales?

– Primarily by going out to the regional markets and working with local dealers who have their own chains of retail shops. That was how we shortened the sales channel, by eliminating middlemen in the form of federal importers. We also learned the local ways of doing things in each region. And by having an innovative product, specially produced for Russia. The company regularly cooperated with universities, and introduced a special series of innovations and patented inventions.

I saw many apartments in Russia still fitted with massive cast iron radiators which were only fit for exhibition in museums. We sold modern radiators and supplied the whole set of equipment. The product sold like hot cakes, because it had a unique design, saving energy and money.

Taxi drivers taught me Russian

– Your firm must have had plenty of scope for supplying heating systems to Russia. After all, most of the country is in Northern latitudes…

– I have travelled all over the Urals, Siberia, Trans-Baikal and the Far East, the remote regions, “the sticks”, which I had to reach by all forms of transport, including ordinary rail travel. I even came across ancient Tu-134 airliners, which are a rarity nowadays. It was a bit scary to fly in these “old crates”, but there was nothing else for it, I had to get on board. The overhead shelves in the passenger compartment were not closed off by doors. During takeoff, everything that had been put on them fell on the heads of the passengers. This was strange for Europeans. But after this, I got used to pushing my hand luggage under the seat, as the other passengers did.

I travelled all over the Urals, Siberia, Trans-Baikal and the Far East. I used all forms of transport, including ordinary rail travel.

– Are Russian partners reliable? Have you had any who tried to swindle you?

– It is like everywhere else in Europe here. There are unreliable Russian purchasers and unreliable Italian suppliers. When you choose someone as a partner, it is important to establish a personal relationship with him, in order to find out if it will be possible to do business with him or not.

– How did you find the Russian mentality?

– In the regions, I socialised a lot with clients, visited their homes, and went with them to dachas and on picnics. If you understand the way of life of your purchasers, it is easier to play on their emotions. Sales are on the rise.

– Is there a noticeable difference between customers in Moscow and in the remote regions?

– In Moscow, companies are more aggressive in the matter of discounts than they are in the sticks.

– Is the Russian language difficult for Italians?

– When I came to Russia, I studied under a teacher for the first three weeks. It’s a complex language, not because of its Cyrillic alphabet, but because of its grammar. After that, local taxi drivers, Azeris and Armenians, became my teachers. They themselves speak broken Russian. I soon learned what to say when I took a driver-owned taxi: “Take me to such-and-such a place, 150 roubles and that’s it”. After that they stopped trying to cheat me. Russians react very positively to a foreigner’s attempts to speak their language. Even if it’s only two or three words, their attitude changes immediately. Not like the English, who won’t bother to listen if a foreigner speaks to them in English.

– So if you’ve come to work in Russia, you really ought to learn Russian?

– It’s essential for business. There was a time when I would go to negotiations taking an interpreter with me. Yes, I was good at selling the product, but I didn’t manage to establish closer contacts with my partners. When I spoke Russian to them, relations became much more cordial. It is customary in the West to think of Russians as being very secretive. It’s true that Europeans are more likely to smile at you and joke with you. But they don’t open up their souls. In close contact, Russians are extremely open, sincere and direct people. There isn’t a trace of affectation in them. If you make friends with a Russian, he really is ready “to give you the shirt off his back”. Of course, this is more characteristic of people who live in the regions.

– Is it because Russians and Italians are close in temperament that you feel so at ease in Russia?

– Yes, Russians in business, like Italians, are very flexible and emotional, in which we greatly differ from the Germans or the English.

Russians in business, like Italians, are very flexible and emotional, in which we greatly differ from the Germans or the English.

– What is the salary level in Russia for specialists like you?

– A salary consists of two components: the fixed part and bonuses. The fixed part is 150,000 roubles (more than 3,500 euros). Bonuses depend on sales results.

– Is it worthwhile for foreigners to come to work in Russia?

– It certainly is! It is profitable and very interesting to work here. The Russian market is about 10 years behind Europe in development. That means that when you bring your products here, you have a 10 year start. That is quite something, and you are really working for the future.